In China, something no one thought possible is happening. Despite executive’s forecasts of double digit growth, sales of top brands like Louis Vuitton, Gucci, and Rolls Royce are suddenly dropping. It’s catching most of these companies by surprise, including Tesla’s creator, Elon Musk. He’s seeing just 10% of the China sales he’d expected for his rechargeable electronic car.
It turns out, companies like Louis Vuitton oversold their brand; so much so, that the wealthy call it the “handbag for secretaries.” A healthy counterfeit market doesn’t help either. All this is exacerbated by a recent crackdown on corruption causing the wealthy to become increasingly shy about flaunting their net-worth. Buying a Rolls Royce just draws too much attention.
Most of these companies built their forecasts upon a process called extrapolation. Extrapolation looks at a trend of sales in the past, and assumes the future will be a continuation of that trajectory. Our built-in biases don’t help much either. It turns out we humans have a tendency to ignore or explain away information which contradicts our view of the future. In groups, this bias is called group think.
Our brains are constantly bombarded with too much information to ever effectively process it all: the dog barking in the background, the clouds moving above, cars traveling down the street, conversations in the next room, the hum of the computer fan. All this information distracts us from focusing in on the conversation we are trying to have, or the article we are trying to write. Our brains constantly filter out most of the information it receives in order to focus on what is perceived to be the most important.
Unfortunately, we also filter out a tremendous amount of useful information. Our brains filter out information which contradicts our personal views. This natural process only increases our built-in bias, and these biases tend to get stronger over time.
Without constant, diligent attention, our biases will get the best of us, causing us to fall prey to the faulty assumptions built upon the extrapolations that life will keep going the way it’s always been. Suddenly one morning, we ”wake up” realizing the style of music people listen to has changed, our clothes are out of style, or the methods we were using no longer work.
Think you are immune? Billion dollar companies like Gucci and Rolls Royce employ the best minds from Ivy League schools, and they still fell prey. Their high-paid marketing staff filtered out meaningful information which was contrary to their belief to where the markets were moving.
But not everyone is falling prey. A growing set of tools are being developed to help us manage the complex sea of information swirling around us. These tools teach us to learn from our environment, identifying cycles, trends, emerging issues, and even potential unexpected events which are influencing the future. They also help us identify the vulnerable assumptions upon which we build our plans; assumptions about ourselves and even the world around us. Many times, these assumptions are much more vulnerable to change than we expect.
Shell Oil was one of the pioneers of these tools. In the 1970s, they were a small company; stuck playing second fiddle to the big boys. Shell, however, started doing something new; something no one else was doing at the time. They began identifying and questioning commonly held assumptions about the oil industry. They also studied changes happening around them, as well as the drivers of each of the stakeholders in the oil industry. Then they developed a broad set of alternate scenarios, describing different potential futures for the oil industry. In these scenarios, Shell identified several vulnerable, yet tightly held assumptions about the oil cartels. Because these assumptions were vulnerable, they began creating contingency plans, just in-case these assumptions fell.
Then one day, they noticed the signs; one of these alternate future scenarios began to emerge. Shell Oil was the only one who recognized the subtle hints. Because they were ready, they were suddenly catapulted to the head of the industry. The big boys found themselves playing catch-up to someone whom they had never given a second thought.
History repeats itself. Today, elite brands like Louis Vuitton are playing catch-up to “second-tier” brands like Coach.
Christian organizations are no less immune to these changes. Though the truth we propagate is timeless, our methods must be re-enculturated to each new generation and culture.
Every aspect of China is in a state of hyper change. The World Bank estimates that in the last 20 years, China has lifted 300 million people out of poverty. Overnight, we are seeing the growth of thousands of mega-cities fueled by the largest human migration the world has ever known. We are seeing the mass urbanization of rural migrant workers. Any one of these could be considered a seismic shift. Together, they constitute a tidal wave of change.
With over 15 years of direct China experience, I have struggled to understand these changes. Yet, I was also surprised to find most of my local, insider friends are equally struggling to understand their new emerging cultural reality as well. Countryside networks are facing the need to re-enculturate their methods to an urban world, largely unknown to them. City churches struggle to find their identity within a unique set of constraints. How much less should our organizations rethink their very identity within these completely new cultural realities?
If ever there were a time for us to explore the use of strategic foresight tools, it’s now.
Look for part two of this series on Friday.
Image credit: Luxury Store by Pelyu Liu via Flickr.
Derek Seipp
Derek Seipp functions as East Asia operations manager for an organization that partners with locals to develop and multiply leaders in China, Taiwan, Japan, Mongolia and Korea. He has 15 years of experience in China, living there for 12 of those years, and has 20 years of experience in …View Full Bio
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